Help in maximizing income returns

4 Replies

I have a fourplex and i manage myself. I have spent (or reinvested, depending on which angle I want to see it) over $20K in 2017 I went to my CPA to ask her how much I would get back on taxes and CPA says probably around 6K. CPA told me was filing my business under schedule C. I bought this fourplex in sept 16 through an FHA loan and I filed for my taxes in 2017 year and I got around 6K and probably spent around 5K fixing it. Why would I be getting around the same amount of taxes back if I reinvested back more money and also invested in cap ex out of pocket. I was thinking I was getting some more money back to continue buying more properties. I don’t know anything about this so that’s why I’m asking. Any advise is welcome. I will be reading about real estate taxes to be more educated in this aspect. Any advice is welcome.

I don't follow your question 100% of the way but I think I got enough to give you an answer.  If the money you spent fixing the property was for major improvements such as a kitchen remodel, a new roof etc.  It is depreciated over several years instead of being immediately deductible like a repair on a toilet or your irrigation system would be.

@Carlos Gonzalez

I am not sure why a rental property is being listed on Schedule C.  It should be on Schedule E (putting it on Schedule C would cause you pay self-employment taxes).

If you put $20,000 into the property as repairs/renovations in 2017, how much of it is deductible in 2017 depends upon the type of work done and the timing in 2017 (the new tax law had some retroactive impact for qualifying work done at the end of the year).

Also, how much of the repairs/renovations are deductible depends upon whether the work is being done on the rental portion of the fourplex or on your personal residence.  The work done on your personal residence is not deductible, but will increase your basis in the property.

My mistake everyone, @Aaron Klatt @Brian Schmelzlen turns out the CPA would be reporting my income and that of the fourplex under schedule E, got confused there for a second.

Some of the work done were repairs and renovations for different units (not mine)  

Thanks for the advice 

@Carlos Gonzalez

There are just so many factors in play to give you an exact answer without knowing all the details

One possible scenario is for you getting the same amount of money back is that you are making over $150,000 and not getting an immediate benefit from your real estate activities(losses are being carried forward).

Another scenario is that the improvements are being capitalized and you are getting the $20,000 benefit over several years and not in the current year.

Another scenario is that you are already getting 100% of your withholding back; of $6,000. Therefore, there is no more that you can get back.

Another scenario is that your accountant was just guessing your refund - did you explain to him that you make more repairs/improvements this year? what was his response

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